- Research institute: a turnaround in the housing market
Is the purchase of one's own home becoming more expensive again? The Kiel Institute for the World Economy (IfW) has registered a turnaround on the German real estate market. Prices for condominiums, single-family and multi-family homes have risen between April and June compared to the previous quarter, the IfW reported.
"The turnaround on the real estate market is underway," said IfW researcher Jonas Zdrzalek. Uncertainty among potential buyers appears to be decreasing, and the outlook for falling interest rates is stabilizing the market. The decline in new construction business is also reducing supply and leading to rising prices.
Compared to the first quarter, prices for condominiums rose by 2.4 percent in the second quarter. Single-family homes cost 2 percent more. Prices for multi-family homes increased by 4.4 percent. In the previous quarter, prices had fallen. The data is based on the Greix real estate price index, which contains data from 19 cities and the Rhein-Erft district near Cologne. Among other institutions, the IfW is involved in Greix.
Rising prices in Hamburg, falling prices in Cologne
Among Germany's seven most populous cities, prices for condominiums rose most strongly compared to the previous quarter in Hamburg (4.3 percent), Frankfurt (3.7 percent), and Düsseldorf (2.2 percent). In Stuttgart, prices increased by 0.6 percent. In Cologne, prices fell by 0.6 percent. No current data was available for Berlin and Munich. Outside the category of the seven most populous cities, prices for condominiums rose significantly in Münster - by 5.6 percent.
End of correction possible
The IfW believes that a correction in the real estate market, which has lasted for around two years, may be coming to an end. A correction typically refers to a downward movement of an index, for example, that corrects inflated values. Greix recorded a price decline of around 14 percent over approximately two years, the IfW reported. The strongest correction was in Stuttgart, where prices fell by more than 20 percent.
"The turnaround in real estate prices, as reported by IfW researcher Jonas Zdrzalek, is largely due to decreasing buyer uncertainty and a stabilizing market outlook with falling interest rates."
"Meriting further consideration, IfW's analysis suggests that the ongoing correction in the German real estate market, which started around two years ago, might be drawing to a close, as evidenced by the reported price increase and declining price drop in various cities."
